Why Have Corporate Tax Revenues Declined? Another Look

Posted: 2 Jul 2008

See all articles by Alan J. Auerbach

Alan J. Auerbach

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Abstract

The relative constancy of non-financial corporate tax revenues as a share of US GDP masks offsetting trends in the ratio of corporate profits to GDP (declining) and the average tax rate (increasing). The average tax rate rose steadily between 1996 and 2003, an increase largely attributable to the importance of tax losses. This rise casts some doubt on the role of tax planning activities in reducing corporate taxes. So, too, does the relative stability of the rate of profit (relative to net assets), which might be expected to have declined had the understatement of profits for tax purposes been increasing.

Keywords: Corporate profits, tax shelters, tax losses

Suggested Citation

Auerbach, Alan Jeffrey, Why Have Corporate Tax Revenues Declined? Another Look. CESifo Economic Studies, Vol. 53, Issue 2, pp. 153-171, 2007. Available at SSRN: https://ssrn.com/abstract=1154450 or http://dx.doi.org/10.1093/cesifo/ifm008

Alan Jeffrey Auerbach (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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